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HEWLETT-PACKARD LOGO
INFORMATION STATEMENT
------------------------
SPIN-OFF OF
AGILENT TECHNOLOGIES, INC.
THROUGH THE DISTRIBUTION
BY
HEWLETT-PACKARD COMPANY
OF 380,000,000 SHARES OF
AGILENT TECHNOLOGIES COMMON STOCK
TO
HEWLETT-PACKARD COMMON SHAREOWNERS
We are sending you this Information Statement because we are spinning off
our Agilent Technologies, Inc. subsidiary to the holders of our common stock. We
are effecting this spin-off by distributing .3814 of a share of Agilent
Technologies common stock as a dividend on each outstanding share of
Hewlett-Packard common stock, amounting to 380,000,000 shares of Agilent
Technologies common stock in total. The dividend will be distributed after
market close on June 2, 2000 to holders of record of Hewlett-Packard common
stock at 5:00 p.m. Eastern time on May 2, 2000.
Agilent Technologies is a global diversified technology company that
provides enabling solutions to high growth markets within the communications,
electronics, healthcare and life sciences industries. Agilent Technologies is a
global leader in designing and manufacturing test, measurement and monitoring
instruments, systems and solutions and semiconductor products and optical
components. Last year, the Hewlett-Packard Board of Directors determined that it
would be in the best interests of Hewlett-Packard shareowners to separate
Agilent Technologies from Hewlett-Packard. In November 1999, Agilent
Technologies completed an initial public offering of about 15.9% of its common
stock. Following this spin-off, we will no longer own a significant number of
shares of Agilent Technologies and Agilent Technologies will be a fully
independent, publicly-traded company. No vote of Hewlett-Packard shareowners is
required in connection with the Agilent Technologies spin-off. Therefore, you
are not required to take any action. We are sending you this Information
Statement, which contains additional information about the terms of the
spin-off, certain tax consequences of the spin-off, Agilent Technologies and
Agilent Technologies' common stock, for your information only. If you would like
more information, please call Corporate Investor Communications, our information
agent, at 1-800-553-4656 (international callers should obtain the AT&T access
code for their country in order to use this number). You may also check our
website at http://www.hp.com/financials.
Neither the Securities and Exchange Commission nor any state securities
regulators have approved the Agilent Technologies common stock to be issued to
you pursuant to this spin-off or determined if this Information Statement is
accurate or adequate. Any representation to the contrary is a criminal offense.
The date of this Information Statement is May 11, 2000.
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CARLETON S. FIORINA HEWLETT-PACKARD COMPANY
President and
3000 Hanover Street
Chief Executive Officer
Palo Alto, CA 94304
www.hp.com
HEWLETT-PACKARD LOGO
May 11, 2000
To our Shareowners:
We are pleased to send you this Information Statement about our spin-off of
Agilent Technologies, Inc. The Information Statement provides you with important
information concerning:
- the U.S. federal income tax treatment of the Agilent Technologies shares
you will receive,
- how we determined the number of shares you will receive,
- how fractional shares will be treated,
- a brief description of the background and business of Agilent
Technologies, and
- how you can obtain additional information about these matters.
We are confident that the spin-off will benefit Hewlett-Packard, Agilent
Technologies and you, our shareowners. We believe that both Hewlett-Packard and
Agilent Technologies will become stronger and more competitive as a result of
the separation. Thank you for your investment in Hewlett-Packard.
Sincerely,
/s/ CARLETON FIORINA
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INFORMATION ABOUT THE SPIN-OFF
THE SPIN-OFF
On April 7, 2000, the Hewlett-Packard Board of Directors approved the
spin-off of Agilent Technologies to holders of Hewlett-Packard's common stock.
To effect this spin-off, the Hewlett-Packard Board declared a dividend on
Hewlett-Packard common stock consisting of 380,000,000 shares of Agilent
Technologies common stock owned by Hewlett-Packard. These shares represent about
84.0% of the outstanding Agilent Technologies common stock. The dividend will be
distributed after market close on June 2, 2000, in the amount of .3814 of a
share of Agilent Technologies common stock for each share of Hewlett-Packard
common stock outstanding on the record date as described below.
You will not be required to pay any cash or other consideration for the
whole shares of Agilent Technologies common stock distributed to you or to
surrender or exchange your shares of Hewlett-Packard common stock to receive the
dividend of Agilent Technologies common stock.
THE NUMBER OF SHARES YOU WILL RECEIVE
For each share of Hewlett-Packard common stock that you owned at 5:00 p.m.
Eastern time on May 2, 2000, the record date, you will be entitled to receive
that number of shares equal to the quotient obtained by dividing the total
number of shares of Agilent Technologies common stock to be distributed in the
spin-off by the approximate number of shares of Hewlett-Packard common stock
outstanding at 5:00 p.m. Eastern time on the record date. Thus, the following
equation determines the number of shares of Agilent Technologies common stock
you will be entitled to receive for each share of Hewlett-Packard common stock
you hold:
Total number of shares of Agilent Technologies to
be = 380,000,000 = .3814
distributed in the spin-off 996,329,000
Approximate number of shares of Hewlett-Packard
common stock outstanding as of 5:00 p.m., Eastern
time, on the record date
Based on the approximate number of shares of Hewlett-Packard Common Stock
outstanding as of 5:00 p.m. Eastern time on May 2, 2000, you will be entitled to
receive .3814 of a share of Agilent Technologies common stock for each share of
Hewlett-Packard common stock you owned at 5:00 p.m. Eastern time on the record
date.
TRADING BETWEEN THE RECORD DATE AND DISTRIBUTION DATE
Between the record date and market close on June 2, 2000, the distribution
date, there will be two markets in Hewlett-Packard common stock, a "regular way"
market and an "ex-dividend" market. Shares that trade on the regular way market
will trade with an entitlement to shares of Agilent Technologies common stock
distributed pursuant to the spin-off. Shares that trade on the ex-dividend
market will trade without an entitlement to shares of Agilent Technologies
common stock distributed pursuant to the spin-off. Therefore, if you owned
shares of Hewlett-Packard common stock at 5:00 p.m. Eastern time on the record
date, and sell those shares on the regular way market prior to market close on
June 2, 2000, the distribution date, you will also be trading the shares of
Agilent Technologies common stock that would have been distributed to you
pursuant to the spin-off. If you sell those shares of Hewlett-Packard common
stock on the ex-dividend market prior to the distribution date, you will still
receive the shares of Agilent Technologies common stock that were to be
distributed to you pursuant to your ownership of the shares of Hewlett-Packard
common stock.
Furthermore, between the record date and market close on the distribution
date there will be two markets in Agilent Technologies common stock, a "regular
way" market and a "when-issued trading" market. The regular way market will be
the same market for shares of Agilent Technologies common stock that currently
exists. The when-issued trading market will be a market for shares of Agilent
Technologies common stock that will be distributed to Hewlett-Packard
shareowners on the distribution date. If you owned shares of Hewlett-Packard
common stock at 5:00 p.m. Eastern time on the record date, then you are entitled
to shares of Agilent Technologies common stock distributed pursuant to the
spin-off. You may trade this entitlement to shares of
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Agilent Technologies common stock, without the shares of Hewlett-Packard common
stock you own, on the when-issued trading market.
WHEN AND HOW YOU WILL RECEIVE THE DIVIDEND
We will distribute the dividend after market close on June 2, 2000 by
releasing our shares of Agilent Technologies common stock to be distributed in
the spin-off to Harris Trust and Savings Bank, our transfer agent. As of 5:00
p.m. Eastern time on June 2, 2000 the transfer agent will cause the shares of
Agilent Technologies common stock to which you are entitled to be registered in
your name. As of that time, you will become the record holder of that number of
shares of Agilent Technologies common stock.
The transfer agent will not deliver any fractional shares of Agilent
Technologies common stock in connection with the spin-off. Instead, the transfer
agent will aggregate all fractional shares and sell them on behalf of those
holders who otherwise would be entitled to receive a fractional share. Such
holders will then receive a cash payment in the amount of their pro rata share
of the total net proceeds of that sale.
You will receive stock certificates representing your ownership of whole
shares of Agilent Technologies common stock from the transfer agent. The
transfer agent will begin mailing stock certificates representing your ownership
of whole shares of Agilent Technologies common stock on or promptly after June
2, 2000, the distribution date. Your check for any cash that you may be entitled
to receive instead of fractional shares of Agilent Technologies common stock
will follow separately. We currently estimate that it will take about two weeks
from the dividend payment date for the transfer agent to complete these
mailings.
U.S. FEDERAL INCOME TAX CONSEQUENCES
Tax-Free Status of the Spin-off. We have received a private letter ruling
from the IRS stating that our distribution of whole shares of Agilent
Technologies common stock to our common shareowners in connection with the
spin-off will be tax-free to us and to the holders of our common stock for U.S.
federal income tax purposes. This means that for U.S. federal income tax
purposes:
- Hewlett-Packard common shareowners will not recognize a gain or loss by
reason of the receipt of whole shares of Agilent Technologies common
stock as a result of the spin-off; and
- Hewlett-Packard will not recognize a gain or loss by reason of the
spin-off.
Although private letter rulings are generally binding on the IRS, we and
our shareowners will not be able to rely on the ruling if any of the factual
representations or assumptions we made to obtain the ruling are incorrect or
untrue in any material respect. We are not aware of any facts or circumstances
that would cause any of these representations or assumptions to be incorrect or
untrue in any material respect. Nevertheless, if the IRS subsequently held our
spin-off to be taxable, the above consequences would not apply and we and our
common shareowners could be subject to tax.
Subsequent Sale of Stock. If you sell your shares of Agilent Technologies
common stock or Hewlett-Packard common stock after the distribution, you will
recognize gain or loss on such sale based on the difference between the proceeds
you receive from the sale and the tax basis allocated to the shares you sold as
described below under "Allocation of Tax Basis." This gain or loss will be a
capital gain or loss, assuming that you held such shares as a capital asset, and
will be a long-term or short-term gain or loss based on your holding period for
such shares as described below under "Holding Period."
Allocation of Tax Basis. Your tax basis for the Agilent Technologies common
stock received in the spin-off will be determined based on your tax basis in the
Hewlett-Packard common stock with respect to which your distribution of Agilent
Technologies common stock was made. Following the spin-off, your aggregate tax
basis in your shares of Hewlett-Packard common stock and Agilent Technologies
common stock, including any fractional shares sold for cash as described above,
will be the same as your tax basis in your shares of Hewlett-Packard common
stock immediately prior to the spin-off. The aggregate tax basis in your shares
of Hewlett-Packard common stock immediately prior to the spin-off will be
allocated between your Agilent Technologies common stock and Hewlett-Packard
common stock in proportion to the fair market value of
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your shares of Hewlett-Packard common stock and Agilent Technologies common
stock at market close on the June 2, 2000 distribution date.
Holding Period. The holding period for capital gains purposes of the shares
of Agilent Technologies common stock that you receive as a result of the
spin-off will include the holding period for your shares of Hewlett-Packard
common stock with respect to which your distribution of Agilent Technologies
common stock was made, provided that your shares of Hewlett-Packard common stock
are held as a capital asset on the dividend payment date.
Treatment of Fractional Shares. If you receive cash in lieu of a fractional
share of Agilent Technologies common stock as part of the spin-off, such cash
will be treated for U.S. federal income tax purposes as paid in exchange for
such fractional share of stock. You will realize a capital gain or loss,
provided that the fractional share is considered to be held as a capital asset,
measured by the difference between the cash you receive for such fractional
share and your tax basis in that fractional share as described above. This
capital gain or loss will be treated as a long-term or short-term gain or loss
based on your holding period for the Hewlett-Packard common stock on which you
received your distribution of Agilent Technologies common stock.
Examples.
To aid you in calculating the allocation of your tax basis, we have
provided examples below, based on the fictitious Companies P and S. In the
following examples, "Company P" is the name of the parent company spinning off
its subsidiary, "Company S." Pursuant to Company P's distribution of the stock
it holds of Company S, each holder of Company P common stock is entitled to
receive .35 of a share of Company S common stock for every share of Company P
common stock held by such holder.
1. On January 4, 1999, Stockholder purchased 100 shares of Company P common
stock at $70 per share for a total of $7,000. Stockholder's tax basis in
her shares of Company P common stock is $7,000. After the distribution,
Stockholder received 35 shares of Company S common stock. On July 1,
2000, Stockholder sold her shares of Company P common stock for $125 per
share and Company S common stock for $100 per share. Stockholder's
proceeds from the sale totaled $16,000. Stockholder's aggregate tax
basis in the shares of Company S common stock and Company P common stock
was $7,000. Therefore, Stockholder will be subject to long-term capital
gains tax on $9,000.
2. On January 4, 1999, Stockholder purchased 50 shares of Company P common
stock at $70 per share for a total of $3,500. Stockholder's tax basis in
her shares of Company P common stock is $3,500. On the distribution
date, the fair market value of Company P common stock was $125 per share
and the fair market value of Company S common stock was $100 per share.
Upon the distribution, Stockholder was entitled to 17.5 shares of
Company S common stock. Stockholder received 17 shares of Company S
common stock and $50 in cash, one-half of the value of one share of
Company S common stock. Stockholder's aggregate tax basis in the shares
of Company S common stock and Company P common stock she holds after the
distribution is $3,500. The fair market value of one share of Company P
common stock on the distribution date was 125% of the fair market value
of one share of Company S common stock. Therefore, Stockholder's per
share tax basis in her Company P common stock should be 125% of her per
share tax basis in her Company S common stock. The sum of Stockholder's
per share tax basis in Company P common stock multiplied by the number
of shares of Company P common stock she holds plus Stockholder's per
share tax basis in Company S common
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stock multiplied by the number of shares of Company S common stock she holds
equals her aggregate tax basis. Thus, the following equation will yield her per
shares tax basis in Company S common stock:
(S x X) + (P x Y) = Stockholder's aggregate tax basis
S equals the number of shares of Company S common stock (including
fractional shares) held by Stockholder;
P equals the number of shares of Company P common stock held by
Stockholder;
X equals Stockholder's per share tax basis in Company S common stock;
Y equals Stockholder's per share tax basis in Company P common stock;
and
Y = R x X
R equals the percent of the fair market value of Company S common
stock represented by the fair market value of Company P common stock.
Thus, in the example above X is determined by the following formula:
17.5X + 50 (1.25 x X) = 3,500
Therefore, Stockholder's per share tax basis in her Company S common stock
is $43.75. Stockholder's per share tax basis in her Company P common stock
is $54.69. Note: You cannot add the per share tax basis of a share of
Company P and a share of Company S together to equal the per share tax
basis of Company P before the distribution ($70). You must multiply the per
share tax basis of one share of Company S stock by .35 because that is how
many shares you receive for each share of Company P common stock. In our
example, to check the calculation, use the following formula:
($54.69) + (.35 x $43.75) = X
$54.69 + $15.31 = $70 (the original per share tax basis)
Stockholder will be subject to long-term capital gains tax on $28.12, the
difference between her basis in one half of a share of Company S common
stock, or $21.88, and the $50 she received as payment for her half share of
Company S common stock.
State, Local and Foreign Tax Consequences. You should consult your own tax
advisor regarding the state, local and foreign tax consequences of your receipt
of shares of Agilent Technologies common stock and any payment for fractional
shares.
Tax Return Statement. U.S. Treasury regulations require you to attach to
your U.S. federal income tax return, for the year in which the spin-off occurs,
a detailed statement setting forth certain information regarding the nature of
the spin-off. Within a reasonable time after completion of the spin-off, we will
provide you with the information necessary to comply with that requirement. You
should retain this statement so it can be completed and attached to your tax
return.
The summary of U.S. federal income tax consequences set forth above is for
general information purposes only and may not be applicable to shareowners who
are not citizens or residents of the United States or who are otherwise subject
to special treatment under the Internal Revenue Code. All shareowners should
consult their own tax advisors as to the particular tax consequences to them of
the spin-off, including the state, local and (if applicable) foreign tax
consequences.
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INFORMATION ABOUT AGILENT TECHNOLOGIES
OVERVIEW OF AGILENT TECHNOLOGIES
BUSINESS
Agilent Technologies is a global diversified technology company that
provides enabling solutions to high growth markets within the communications,
electronics, healthcare and life sciences industries. Agilent Technologies'
broad technology portfolio and its experience in working with market-leading
customers in more than 120 countries has allowed it to establish and advance its
leadership across multiple markets.
Agilent Technologies includes the following four primary businesses:
- TEST AND MEASUREMENT, which provides test instruments, standard and
customized test, measurement and monitoring instruments and systems for
the design, manufacture and support of electronics and communications
devices and software for the design of high-frequency electronic and
communications devices;
- SEMICONDUCTOR PRODUCTS, which provides fiber optic communications devices
and assemblies, integrated circuits for wireless applications,
application-specific integrated circuits, optoelectronic devices and
image sensors;
- HEALTHCARE SOLUTIONS, which provides patient monitoring, ultrasound
imaging and cardiology products and systems; and
- CHEMICAL ANALYSIS, which provides analytical instruments, systems and
services for chromatography, spectroscopy and bio-instrumentation.
Agilent Technologies' test and measurement and semiconductor businesses
share focus on growth opportunities in the communications sector, while its
healthcare and chemical analysis businesses share focus on growth opportunities
in healthcare and life sciences. All of its businesses are supported by the
technical expertise of Agilent Technologies Laboratories, one of the world's
foremost industrial research and development organizations. Agilent Technologies
Laboratories is thoroughly integrated with Agilent Technologies' businesses in
design, development and manufacturing engineering, and substantially all of its
development engineers are aligned with the research and development teams in
Agilent Technologies' individual businesses.
Over the 60-year history of the businesses of Agilent Technologies, they
have developed close relationships with market-leading customers, working with
thousands of customers around the world as technologies, business needs and
global economic conditions have undergone dramatic changes. These close
relationships have provided Agilent Technologies invaluable strategic market
insights and have been central to its success.
Agilent Technologies has established leadership positions across multiple
markets and is a leading supplier of:
- test and measurement instruments and systems;
- application-specific semiconductor devices, fiber optic components and
assemblies and imaging components;
- patient monitoring and ultrasound imaging equipment and automatic
external defibrillators; and
- chemical measurement instruments and systems.
Agilent Technologies sells its products primarily through Agilent
Technologies' direct sales force, but Agilent Technologies also utilizes
distributors, resellers, telesales and electronic commerce. Of its total net
revenue of $8.3 billion in the fiscal year ended October 31, 1999, Agilent
Technologies generated 44.8% in the United States and 55.2% internationally. As
of October 31, 1999, Agilent Technologies employed approximately 42,000 people
worldwide. Agilent Technologies has major research and development and
manufactur-
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ing sites in California, Colorado, Delaware, Massachusetts, and Washington in
the United States and in China, Germany, Japan, Korea, Malaysia, Singapore and
the United Kingdom.
BACKGROUND OF THE SEPARATION OF AGILENT TECHNOLOGIES FROM HEWLETT-PACKARD
In March 1999, Hewlett-Packard's Board of Directors decided to
strategically realign Hewlett-Packard to create two distinct companies, one
focused on Hewlett-Packard's computing and imaging businesses, the other on
Agilent, containing HP's test and measurement businesses, semiconductor
products, chemical analysis and healthcare solutions businesses. On March 2,
1999 Hewlett-Packard's Board of Directors approved the realignment in the form
of a spin-off transaction. In connection with the spin-off, Hewlett-Packard
transferred the assets and liabilities of its Measurement Organization which
includes its test and measurement, semiconductor products, chemical analysis and
healthcare solutions businesses to Agilent Technologies on November 1, 1999, the
separation date. Immediately after the separation date, Agilent Technologies
began operating as a separate subsidiary of Hewlett-Packard. Agilent
Technologies launched an initial public offering of approximately 15.9% of its
Common Stock on November 18, 1999. Upon the completion of the initial public
offering, Hewlett-Packard owned approximately 84.1% of the shares of Agilent
Technologies Common Stock.
In the final step of the realignment, Hewlett-Packard plans to distribute
all of the shares of Agilent Technologies common stock it owns to the holders of
Hewlett-Packard's common stock on a pro rata basis. On April 7, 2000, the
Hewlett-Packard Board of Directors approved the distribution of 380,000,000
shares of Agilent Technologies common stock to holders of Hewlett-Packard common
stock as of 5:00 p.m. Eastern time on May 2, 2000 by means of a dividend as
described in this Information Statement. After the spin-off, Hewlett-Packard
will not own a significant number of shares of Agilent Technologies common stock
and Agilent Technologies will be a fully independent, publicly-traded company.
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INFORMATION ABOUT AGILENT TECHNOLOGIES COMMON STOCK
AGILENT TECHNOLOGIES COMMON STOCK
Under Agilent Technologies' Amended and Restated Certificate of
Incorporation, the authorized capital stock of the company is 2,000,000,000
shares of common stock, $.01 par value, and 125,000,000 shares of undesignated
preferred stock, $.01 par value. As of April 30, 2000, there were 452,272,467
shares of Agilent Technologies common stock outstanding and no shares of Agilent
Technologies preferred stock outstanding.
MARKET FOR AGILENT TECHNOLOGIES COMMON STOCK
Agilent Technologies common stock trades on the New York Stock Exchange
under the symbol "A." A public market was established for Agilent Technologies
common stock as a result of Agilent Technologies' initial public offering in
November 1999.
The following table sets forth, for the periods indicated, the high and low
sale prices of Agilent Technologies common stock as reported on the New York
Stock Exchange. We urge you to obtain current quotations for Agilent
Technologies common stock.
2000 HIGH LOW
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First Quarter (November 18 to January 31)................. $ 79.25 $40.00
Second Quarter (February 1 to April 30)................... $159.00 $71.00
AGILENT TECHNOLOGIES TRANSFER AGENT
The transfer agent and registrar for Agilent Technologies common stock is
Harris Trust and Savings Bank. You may contact the transfer agent and registrar
at the address set forth below or at its toll free number 1-800-286-5977.
Stockholders outside the United States and Canada may contact the transfer agent
and registrar by calling (312) 461-4061. All correspondence should be sent to
the following address:
Harris Trust and Savings Bank
Shareholder Services
P.O. Box A3504
Chicago, Illinois 60690
Agilent Technologies and Hewlett-Packard are each subject to the
informational reporting requirements of the Securities Exchange Act of 1934, as
amended. Accordingly, each company files registration statements, reports, proxy
statements and other information with the Securities and Exchange Commission, or
SEC, including financial statements. Agilent Technologies has been subject to
the Securities Exchange Act reporting requirements for at least 90 days and is
current in its reporting. If you would like more information about Agilent
Technologies, we urge you to read Agilent Technologies' reports filed with the
SEC.
You may read and obtain copies (at prescribed rates) of Agilent
Technologies' and Hewlett-Packard's reports at the Public Reference Section of
the SEC at 450 Fifth Street, N.W., Washington, D.C., 20549. You may also obtain
these reports at the SEC's website at http://www.sec.gov. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. You may
also inspect these reports at the New York Stock Exchange, Inc., 20 Broad
Street, New York, New York 10005.
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5980-1407EUS